Make The World
More Sustainable[Provisional Translation Only]
This English translation of the original Japanese document is provided solely for information purposes.
Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

March 31, 2020
IssuerIchigo Office REIT Investment Corporation (“Ichigo Office,” 8975)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Yoshihiro Takatsuka, Executive Director
www.ichigo-office.co.jp/english
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Hiroshi Iwai, President
Inquiries: Sanae Hiraoka, Head of Ichigo OfficeTel: +81-3-3502-4891

Sale of Retail Asset (Lions Square Kawaguchi)
Consistent with its strategy to focus on office assets as a specialized office REIT, Ichigo
Office decided today to sell one of its few remaining retail assets, the Lions SquareKawaguchi in Saitama Prefecture.
1. Asset Sale Summary

12

Asset Number
Asset Name

Z-12
Lions Square Kawaguchi

Asset Type

RetailDate Built

July 6, 1998

Form of Ownership

Trust beneficiary interest in real estate (juekiken)

Acquisition DateDecember 15, 2014

Buyer1

Japanese operating companySale Price2 (A)JPY 2,845 million

Book Value3 (B)Sale Price vs.
Book Value(A) – (B)JPY 2,357 million

Appraisal Value4

JPY 2,530 million

Contract Date

March 31, 2020

Closing Date

April 24, 2020

Legal Form ofTransaction

Sale of trust beneficiary interest in real estate (juekiken)+JPY 487 million

The buyer did not provide consent to disclose its name.
Sale Price is the sale price of the asset excluding incidental expenses such as fees andproperty, city planning, and consumption taxes.
13Book Value is an estimate based upon the most recent book value (October 2019 fiscalperiod), adjusted for capital expenditures and depreciation through the Closing Date.
Sale Price vs. Book Value is the difference between the sale price and book value ofthe asset (i.e., the Sale Price is higher than Book Value).
4
Appraisal Value is calculated by Daiwa Real Estate Appraisal as of October 31, 2019,and is in compliance with the appraisal guidelines of IIA as well as the rules of theInvestment Trusts Association of Japan.
2. Transaction Rationale
As a specialized office REIT, Ichigo Office continues to execute on its strategy to growshareholder value by focusing its portfolio on high-quality, mid-size office assets andsecure funds for growth investments via sales of non-office assets.
Ichigo Office decided to sell the asset because of the significant anticipatedexpenditures required for upgrades to maintain its competitiveness and the uncertain
outlook for rents from supermarkets and gym tenants in the area. With this asset sale,
Ichigo Office’s post-transaction portfolio will be 96.7% office assets.
To avoid a decrease in Ichigo Office’s earnings and dividend due to the sale, proceedsfrom the sale will be used for strategic investments such as asset acquisitions and valueadd capex.
3. Details of Lions Square Kawaguchi
Asset Name
Legal Form of Asset
Location
Property Right
Area
Land
ZoningCoverage Ratio
Floor Area Ratio
Property Right
Use
Building
Structure
Total Floor Area
Date Built
Number of Tenants
Monthly Rental Income
Tenant Security Deposits
Leasable Area
Leased Area
Occupancy
Acquisition Price

Asset Overview
Lions Square Kawaguchi
Trust beneficiary interest in real estate (juekiken)2-15-3 Motogo, Kawaguchi City, Saitama Prefecture
Freehold
9,531.83m2
Quasi-industrial
60%
200%
Freehold
Retail, Training Area, Parking
Steel/Steel Reinforced Concrete, 6 Floors
7,309.66m2
July 6, 1998
3 (as of February 29, 2020)
JPY 11.42 million (as of February 29, 2020)
JPY 106.9 million (as of February 29, 2020)
7,788.09m2 (as of February 29, 2020)
7,788.09m2 (as of February 29, 2020)
Apr 2018 Oct 2018 Apr 2019 Oct 2019
100%
100%
100%
100%
JPY 2,430 million

2Feb 2020
100%

Appraisal
Value

Appraiser
Appraisal Date
Appraisal Value

Daiwa Real Estate Appraisal Co., Ltd.
October 31, 2019
JPY 2,530 million

Note: Monthly Rental Income (including utilities fees) and Tenant Security Deposits
refer to those stated in the lease agreement.

3Asset Name
Appraisal Value
Appraiser
Appraisal Date
Appraisal Value
Value by Direct
Capitalization Method
IncomeForecast FullOccupancy Rental
IncomeForecast Decrease
in Rental Income
due to Vacancy
Expenses
Administrative &MaintenanceExpenses

Appraisal Details
Lions Square Kawaguchi
JPY 2,530,000,000
Daiwa Real Estate Appraisal Co., Ltd.
October 31, 2019
AmountNoteBased on a DCF valuation, and verified
JPY 2,530,000,000
using a direct capitalization valuation
JPY 2,510, 000,000
JPY 243,067,097
Based on an analysis of potential rental
JPY 265,035,344 income, common area service income,parking lot income, and other income
JPY 21,968,247 Based on long-term vacancy rates
JPY 108,831,950
JPY 16,962,480

Utility Expenses

JPY 53,714,520

Repair Expenses

JPY 2,310,167

PM FeeLeasing
Brokerage Fees
Taxes

JPY 4,704,169
JPY 1,457,486
JPY 27,916,000

Based on an analysis of expenses ofsimilar assets and past actual amounts
Based on similar assets and past actualamounts
Based on engineering reports andsimilar assets
Based on analysis of similar assets
Based on expected turnover rate forsimilar assets and past actual amounts
Based on FY2019 actual amounts

Insurance
Premiums

JPY 794,860 Based on FY2019 actual amounts

Other Expenses

JPY 972,268

Net Operating
Income (NOI)
Income on
Investment ofDeposits Received
CapitalExpenditure
Net Profit

0.4% of rental income (accounted for asa variable expense)

JPY 134,235,147
JPY 1,134,730 Based on a 1.0% investment yield
JPY 22,262,750

Based on engineering reports andsimilar assets

JPY 113,107,127
Based on yields of similar real estate
assets and of Japanese financial assets,
4.5%
taking into account the asset’s specificcharacteristics

Cap Rate

4

Value via DCF Method

JPY 2,540,000,000

Discount Rate

Based on transactions of similar assets
and the yields of financial assets with
4.3%
the asset’s individual characteristics
taken into account

Terminal Cap Rate

4.7% Based upon risk-adjusted NOI

Accounting Value

JPY 3,300,000,000

Land

Based upon value recorded in80.8% government national land assessment(kouji kakaku)

Building

19.2% Based upon post-depreciation valueNotes
A DCF valuation (verified using a direct capitalization valuation) was the primary valuation
methodology employed, because it reflects market value and is thus more relevant thanaccounting value.

54. Buyer Profile
NameRelationship with
Ichigo Office or IIA

The buyer, a Japanese operating company unrelated toIchigo Office, did not provide consent to disclose its name.
The buyer does not have any capital, personnel, ortransactional relationships with Ichigo Office or IIA
requiring disclosure under Tokyo Stock Exchange rules. In
addition, the buyer is not a related party as defined in theEnforcement Ordinance of the Investment Trust andInvestment Corporation Law or the internal rules of theAsset Management Company.

5. Broker Profile
Name
Address
Representative
Principal Businesses
CapitalEstablishment Date

SMBC Trust Bank Ltd.
1-3-1 Nishi-Shinbashi, Minato-ku, Tokyo
President & CEO Kozo Ogino
Trust business and banking business
JPY 87.55 billion (as of March 31, 2019)
February 25, 1986

Relationship withIchigo Office or IIA

The broker does not have additional capital, personnel, ortransactional relationship of note with Ichigo Office or IIA
requiring disclosure under Tokyo Stock Exchange rules. Inaddition, the broker is not a related party as defined in theEnforcement Ordinance of the Investment Trust andInvestment Corporation Law.

Broker Fee

The broker did not provide consent to disclose the brokerfee.

6. Payment Method
Lump-sum payment at closing.
7. Use of Sale Proceeds
Ichigo Office will retain the proceeds from the sale as cash on hand to use them forstrategic investments such as asset acquisitions and value-add capex.
8. Earnings Outlook
The asset sale is forecast to generate gains on sale of JPY 370 million.1 Subject tocomplying with J-REIT conduit requirements, Ichigo Office will retain all or part of thegains on sale to fund growth investments such as acquisitions and value-add capex.
Therefore, the impact of the sale on Ichigo Office’s April 2020 earnings is minimal.
There is no change to Ichigo Office’s April 2020 earnings forecast.
1

Calculated as sale price including property and city-planning taxes minus book valueand expected sale-related expenses

6Appendix: Post-Transaction Portfolio
No.
O-02
O-03
O-04
O-05
O-06
O-07
O-08
O-09
O-10
O-11
O-12
O-14
O-15
O-16
O-17
O-18
O-19
O-20
O-21
O-22
O-23
O-24
O-26

Area1

Asset Name

O-27
O-28
O-29

Ichigo Nishisando Building
Ichigo Mita Building
Ichigo Nanpeidai Building
Ichigo Hanzomon Building
Ichigo Hijirizaka Building
Ichigo Shibuya Kamiyamacho Building
Ichigo Akasaka 5 Chome Building
Ichigo Shibakoen Building
Ichigo Ebisu Nishi Building
Ichigo Ginza 612 Building
Ichigo Uchikanda Building
Ichigo Yotsuya 4 Chome Building
Ichigo Tameike Building
Ichigo Jimbocho Building
Ichigo Hakozaki Building
Ichigo Kudan 2 Chome Building
Ichigo Kudan 3 Chome Building
Ichigo Gotanda Building
Ichigo Shin Yokohama Building
Ichigo Minami Ikebukuro Building
Ichigo Nakano North Building
Ichigo Eitai Building
Ichigo Ikejiri Building
Ichigo Nishi Ikebukuro Building
Ichigo Nishi Gotanda Building
Ichigo Kichijoji Building

O-34

Ichigo Sakae Building

O-37

Ichigo Marunouchi Building

O-38
O-39
O-42
O-46
O-47

Ichigo Toyamaeki Nishi Building
Ichigo Mirai Shinkin Building
Ichigo Takamatsu Building
Ichigo Kanda Nishikicho Building
Ichigo Akihabara North Building

O-48

Ichigo Sakaisuji Honmachi Building

O-49

Ichigo Kanda Ogawamachi Building

Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Tokyo Metro Area
Tokyo Metro Area
Tokyo Metro Area
Tokyo Metro Area
Tokyo Metro Area
Tokyo Metro Area
Central Tokyo
Tokyo Metro Area
Four Major Regional
CitiesFour Major Regional
CitiesOther Regional Cities
Other Regional Cities
Other Regional Cities
Central Tokyo
Central Tokyo
Four Major RegionalCities
Central Tokyo
7

Acquisition
Price(JPY million)% ofPortfolio2

3,254
2,740
1,920
1,550
1,200
1,505
735
1,100
1,917
1,773
1,140
550
580
1,820
1,150
763
844
5,060
1,816
1,460
764
1,490
2,030
639
765
2,160

1.6
1.4
0.9
0.8
0.6
0.7
0.4
0.5
0.9
0.9
0.6
0.3
0.3
0.9
0.6
0.4
0.4
2.5
0.9
0.7
0.4
0.7
1.0
0.3
0.4
1.1

4,705

2.3

6,710

3.3

1,645
1,1583,010
2,130
5,500

0.8
0.6
1.5
1.1
2.7

1,940

1.0

2,210

1.1

No.
O-50
O-51
O-52
O-53
O-54
O-55
O-56
O-57
O-58
O-59
O-60
O-61
O-62
O-63
O-64
O-65
O-66
O-67
O-68
O-69
O-70
O-71
O-72
O-73

Area1Asset Name
Ichigo Hatchobori Building
Ebisu Green Glass
Ichigo Omori Building
Ichigo Takadanobaba Building
Ichigo Omiya Building
Ichigo Sagamihara Building
Ichigo Ofuna Building
Ichigo Sendai East Building
Ichigo Kumamoto Building
Ichigo Jingumae Building
Ichigo Shibuya Dogenzaka BuildingIchigo Hiroo Building
Ichigo Sasazuka Building
Ichigo Nihonbashi East Building
Ichigo Sakurabashi Building
Ichigo Shinkawa Building
Ichigo Kudan Building
Ichigo Higashi Gotanda Building
Axior Mita
Ichigo Higashi Ikebukuro Building
Koriyama Big-i (Office Section)
Ichigo Kawasaki Building
Ichigo Shibuya East Building
Ichigo Ningyocho Building

Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Tokyo Metro Area
Tokyo Metro Area
Tokyo Metro Area
Other Regional Cities
Other Regional Cities
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Tokyo Metro Area
Other Regional Cities
Tokyo Metro Area
Central Tokyo
Central Tokyo
Four Major Regional
CitiesFour Major Regional
CitiesFour Major Regional
CitiesTokyo Metro Area
Tokyo Metro Area
Central Tokyo
Tokyo Metro Area
Four Major Regional
CitiesFour Major Regional
CitiesFour Major Regional
CitiesFour Major Regional
Cities

O-74 Ichigo Nishi Honmachi Building
O-75 Ichigo Hakata Building
O-76 Ichigo Nishiki First Building
O-77
O-78
O-79
O-80

Ichigo Ikenohata Building
Ichigo Ikebukuro East Building
Ichigo Motoazabu Building
Ichigo Otsuka Building

O-81 Ichigo Nagoya Building
O-82 Ichigo Fushimi Building
O-83 Ichigo Nishiki Building
O-84 Ichigo Minami Morimachi Building
8Acquisition
Price(JPY million)
1,905
5,900
3,850

% ofPortfolio2

1,580
3,430
1,174
2,000
1,840
1,450
7,200
3,650
3,960
4,780
4,700
2,500
2,360
3,190
3,660
1,800
4,570
1,660
1,750
1,350
1,450

0.9
2.9
1.9
0.8
1.7
0.6
1.0
0.9
0.7
3.6
1.8
2.0
2.4
2.3
1.2
1.2
1.6
1.8
0.9
2.3
0.8
0.9
0.7
0.7

2,190

1.1

1,380

0.7

2,000

1.0

5,130
3,010
1,890
2,740

2.5
1.5
0.9
1.4

3,420

1.7

2,340

1.2

1,330

0.7

1,040

0.5

No.
O-85
O-86
O-87
O-88
O-89
O-90
O-91
O-92
O-93
O-94
O-95
Z-09
Z-10
Z-11
Z-14

Area1Asset Name
Ichigo Shibuya Udagawacho Building
Win Gotanda Building
Ichigo Hongo Building
Oimachi Center Building
Win Gotanda Building 2
MIF Building

Central Tokyo
Central Tokyo
Tokyo Metro Area
Central Tokyo
Central Tokyo
Central Tokyo
Four Major Regional
Ichigo Uchi Honmachi Building
CitiesIchigo Minami Otsuka Building
Tokyo Metro Area
Ichigo Nogizaka Building
Central Tokyo
Four Major Regional
Ichigo Hakata East Building
CitiesIchigo Nakameguro Building3
Tokyo Metro Area
Subtotal - Office (81 Assets)
Konami Sports Club Izumi Fuchu
Other Regional Cities
Ichigo Shibuya Bunkamura Dori Building
Central Tokyo
Twicere Yokohama Isogo (Retail Section)
Tokyo Metro Area
Ichigo Kamata Building
Tokyo Metro Area
Subtotal - Other (4 Assets)
Total (85 Assets)

TK Equity Investment Tachikawa Holdings GK TK Equity Interest
1Acquisition
Price(JPY million)% ofPortfolio2

3,500
3,100
2,300
1,680
3,300
2,200

1.7
1.5
1.1
0.8
1.6
1.1

1,9000.9

2,780
3,315

1.4
1.6

2,250

1.1

1,495
195,732
1,210
2,400
1,620

0.7
96.7

1,400
6,630
202,362

0.6
1.2
0.8
0.7
3.3
10050–

Central Tokyo refers to Chiyoda, Minato, Chuo, Shinjuku, Shibuya, and Shinagawa Wards. Tokyo Metro
Area refers to Tokyo (excluding the six wards above), Kanagawa, Chiba, and Saitama Prefectures. FourMajor Regional Cities refers to Osaka, Nagoya, Fukuoka, and Sapporo.
2% of Portfolio is based upon acquisition price.
3Ichigo Office will complete the acquisition of the Ichigo Nakameguro Building announced in the January
29, 2020 release “Acquisition of Office Asset (Ichigo Nakameguro Building)” on April 14, 2020.

9